If a bond is in the TRACE database while the issue is still in the primary market, is it misreporting to submit a TRACE report on a transaction?
Yes. Until secondary market OTC trading officially begins, no TRACE reports may be submitted. In order to capture the first day of secondary market trading, it is necessary to set up a new issue in the TRACE database as soon as the requisite information (under Rule 6260) is supplied to FINRA Market Operations. It is the firms’ responsibility to make sure that if automated systems are used to report transactions to TRACE, only secondary market transactions are transmitted. If TRACE reporting is a default in such a system, firms must have the ability to override this default. If I buy or sell a sinking fund bond that trades on yield to average life, don’t I use this yield when reporting to TRACE? No. Under TRACE Rule 6230 (c)(13), a member must report the lower of yield to call or yield to maturity, even if the transaction was effected using a different standard. For interpretive guidance, please see Notice to Members 02-76 , Question 7. How do I comment on TRACE rule filings? All commen
Related Questions
- If a bond is in the TRACE database while the issue is still in the primary market, is it misreporting to submit a TRACE report on a transaction?
- What is the difference between buying a bond in the primary market and in the secondary market?
- Can the database become the primary access point for monographs in the library market?
